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FWS Proposes Landmark Rules for Regulating Critical Habitat Under the Endangered Species Act

Beveridge & Diamond, P.C., May 20, 2014

On May 12, 2014, the U.S. Fish and Wildlife Service (“FWS”) proposed two new rules and a draft guidance document to address the regulation of “critical habitat” under the Endangered Species Act (“ESA”).  While the Service downplays the importance of its proposals, if codified they will significantly expand critical habitat designations and result in far more restrictions on activities planned in critical habitat areas.  As a result, the proposals represent one of the most important regulatory developments under the ESA in nearly thirty years.  Key implications include the following:

  • The proposals would expand the universe of features eligible to be designated as critical habitat.  They would enable FWS to designate critical habitat more liberally to include areas where a species no longer lives, areas that a species rarely uses, areas that do not support the habitat features that are essential to a species’ conservation, and areas that might provide habitat for a species in the future if climate change or other factors affect the species’ range or migration patterns.  Thus, the proposals would allow FWS to designate many more areas as critical habitat and make those designations broader than it currently does.
  • The proposals would significantly expand the definition of “destruction or adverse modification” of critical habitat.  Under the proposals, “destruction or adverse modification” would include activities that affect areas that currently do not provide habitat essential to a species’ conservation, activities that affect areas where the species does not live if those areas in some way benefit the species, activities in areas outside of designated critical habitat that might influence critical habitat, and activities that could delay the development of critical habit features in areas where they do not already exist.  Thus, the proposals would enable FWS to find that more activities occurring in, or even near, designated critical habitat areas affect those areas  
  • An increase in the number and scope of critical habitat areas will increase the likelihood that a proposed activity will occur in or near designated critical habitat.  A broader definition of “destruction or adverse modification” of critical habitat will increase the likelihood that FWS will find that a proposed activity may affect critical habitat and therefore the likelihood that the activity will be subject to Section 7 consultation under the ESA.  As a result, the proposed rules would lead to more federal oversight of private activities, require more time and money to obtain federal permits and authorizations, and result in more restrictions on project development and operation to minimize impacts to critical habitat.   

Stakeholders may submit comments on the proposals to FWS through July 11, 2014.

Background

In passing the ESA, Congress viewed habitat loss as a significant obstacle to species conservation.  It therefore designed the statute to protect species and their habitat.  To that end, when FWS lists a species as threatened or endangered, it also must designate critical habitat for the species.  

The ESA defines “critical habitat” as “the specific areas within the geographical area occupied by the species, at the time it is listed . . ., on which are found those physical and biological features (1) essential to the conservation of the species and (2) which may require special management considerations or protection.”  16 U.S.C. § 1532(5)(A).  The Service also may designate specific areas outside of a species’ geographic range as critical habitat if it considers those areas essential for the conservation of the species.  Id.  Conversely, the Service may exclude any area from a critical habitat designation if it determines that the benefits of doing so outweigh the benefits of designating the area and that it would not result in species extinction.

Once designated, critical habitat helps to conserve listed species in several ways.  Informally, it helps agencies, scientists, and private parties focus conservation efforts on areas necessary for a species’ survival.  Formally, it may trigger significant regulatory restrictions.  Section 7 of the ESA requires federal agencies to consult with FWS any time they propose to take action, such as issuing a permit or authorizing activity on federal land, that might result in the “destruction or adverse modification” of critical habitat.  Id. § 1536(a)(2).  This requirement has broad implications.  If the proposed activity might destroy or adversely modify critical habitat, FWS must identify “reasonable and prudent alternatives” designed to avoid that outcome.  Oftentimes, those alternatives translate into permit conditions or project constraints that are passed on to the project proponent. 

Designation of Critical Habitat

The first proposed rule would amend the regulations governing the Service’s designation of critical habitat under the ESA.  79 Fed. Reg. 27066 (May 12, 2014), available here.  The proposed amendments would make minor edits to the scope and purpose of the critical habitat regulations, add and remove several definitions, and update the criteria for designating critical habitat.  Together, these changes would broaden the geographic reach of critical habitat designations.

The most significant changes in the proposal are the addition of two new definitions for terms found within the definition of “critical habitat.”  As explained above, the ESA defines “critical habitat” to mean “the specific areas within the geographical area occupied by the species, at the time it is listed . . ., on which are found those physical and biological features (1) essential to the conservation of the species and (2) which may require special management considerations or protection.”  16 U.S.C. § 1532(5)(A).  For the first time, FWS is proposing to define “geographical area occupied by the species” and “physical or biological features” in its regulations. 

Under the proposal, FWS would define “geographical area occupied by the species” to mean “the geographical area which may generally be delineated around the species’ occurrences, as determined by the Secretary (i.e., range).”  79 Fed. Reg. at 27068-69.  The agency explains that “[s]uch areas may include those areas used throughout all or part of the species’ life cycle, even if not used on a regular basis (e.g., migratory corridors, seasonal habitats, and habits used periodically, but not solely by vagrant individuals).”  Id.  This definition would enable FWS to designate as critical habitat areas that are not occupied by a listed species and areas that a species uses infrequently at any point during its life based on little more than “indirect or circumstantial evidence.”  Id. at 27069.  In addition, because the Service rarely meets its statutory obligation to designate critical habitat concurrently with listing a species, this definition would allow the agency to include areas that were not recognized as being within the species’ range at the time FWS listed it as threatened or endangered.  Id.  In fact, FWS plans to take this a step further,  stating that it expects increasingly to designate areas as critical habitat outside of a species’ geographical range in anticipation of possible changes in the species’ distribution or migration patterns attributed to climate change and other factors.  Id. at 27073. 

The Service proposes to define “physical or biological features” to mean “the features that support the life-history needs of the species, including but not limited to water characteristics, soil type, geological features, sites, prey, vegetation, symbiotic species, or other features.”  Id. at 27069.  FWS explains that “[a] feature may be a single habitat characteristic, or a more complex combination of habitat characteristics . . . [and] may include habitat characteristics that support ephemeral or dynamic habitat conditions.”  Id.  Moreover, the agency says that features may be expressed “in terms relating to principles of conservation biology, such as patch size, distribution distances, and connectivity.”  Id.  This definition would significantly expand the areas eligible for designation as critical habitat to include locations that rarely exhibit the features necessary for species conservation based on the mere presence of environmental conditions that could lead to those features developing (e.g., areas that might temporarily support certain plant growth following a flood because the area is close to a river and has the appropriate topography and soils for those plants to grow), previously-impacted areas that no longer support the features essential to the species’ conservation, and areas inhabited by a species’ prey and symbiotic partners but not the species itself. 

“Destruction or Adverse Modification”

In the second of FWS’s proposed rules, the Service would revise its regulatory definition of “destruction or adverse modification” of critical habitat for purposes of determining when a federal activity triggers the ESA’s consultation requirement.  79 Fed. Reg. 27060 (May 12, 2014), available here.  FWS’s current definition of “destruction or adverse modification,” promulgated in 1986, covers “a direct or indirect alteration that appreciably diminishes the value of critical habitat for both the survival and recovery of a listed species.”  50 C.F.R. § 402.02.  FWS abandoned that definition, however, after two courts found that it violates the ESA by setting the bar too high in requiring the activity to both diminish the value of critical habitat for a species’ survival and for the species’ recovery.  Sierra Club v. U.S. Fish and Wildlife Service, 245 F.3d 434 (5th Cir. 2001); Gifford Pinchot Task Force v. U.S. Fish and Wildlife Service, 378 F.3d 1059 (9th Cir. 2004).  The courts ruled that the definition was not protective enough because Congress had enacted the ESA to promote both survival and recovery of at-risk species, which it viewed as two separate goals. 

To fill in the gap left in the wake of those rulings, FWS now proposes a new definition to respond to the courts’ concerns.  Under the proposed definition, “destruction or adverse modification” would mean “[a] direct or indirect alteration that appreciably diminishes the conservation value of critical habitat for listed species.  Such alterations may include, but are not limited to, effects that preclude or significantly delay the development of the physical or biological features that support the life-history needs of the species for recovery.”  79 Fed. Reg. at 27061.  This definition is far broader than the one currently on the books.

FWS’s proposal attempts to address the court decisions that invalidated the current definition by connecting “destruction or adverse modification” to activities that impact a critical habitat’s “conservation value” – a term the agency says connotes aspects of a species’ recovery and “necessarily includes attributes critical to a species’ survival.”  Id.  The new definition also would protect areas that currently do not exhibit those physical or biological features necessary for a species’ conservation, areas where those features presently are of “sub-optimal quantity or quality” (e.g., when habitat has been temporarily degraded by human activity or is part of an ecosystem responding to a natural disturbance like a fire or a flood), and even areas that are not occupied by the species.  Id. at 27061-62.  As a result, FWS could find “destruction or adverse modification” not only when an activity directly impacts critical habitat but also when it would “preclude or significantly delay habitat regeneration or natural successional processes” or affect areas outside of a species’ current geographic range if those areas could support features that would benefit the species’ future food, water, shelter, light, weather, or migratory needs.  Id.

The effects of this proposal would be far-reaching.  It would drastically expand the range of activities that constitute “destruction or adverse modification” and provide the Service with much more discretion in its evaluations.  Rather than requiring FWS to focus only on the direct and indirect effects to the environmental baseline, the agency also could consider the future value of features that currently may not exist in areas where a species currently does not live.  That would allow the Service to find “destruction or adverse modification” more often, trigger Section 7 consultation under the ESA more frequently, and lead to more restrictions on and higher ESA compliance costs for project proponents.   

Guidance on Exclusions from Critical Habitat Designations

The Service also issued a draft policy document concurrently with its two proposed regulations to help the agency decide whether to exclude areas from a critical habitat designation.  79 Fed. Reg. 27052 (May 12, 2014), available here.  The proposed guidance likely will be less controversial than the two proposed regulatory amendments because it describes the Services’ process for implementing the ESA rather than changing the agency’s interpretation of the statute. 

As explained above, the ESA authorizes FWS to exclude an area from a critical habitat designation “if the benefits of . . . exclusion outweigh the benefits of specifying such area as part of the critical habitat.”  16 U.S.C. § 1533(b)(2).  The draft guidance sets forth the Service’s procedures for considering possible exclusion areas, including how the agency plans to account for conservation plans, tribal lands, national security and homeland security impacts, military lands, Federal lands, and economic impacts.  Of particular relevance to project proponents, the proposal describes the factors that FWS intends to analyze when considering whether to exclude an area based on existing private or other non-Federal conservation plans and partnerships.  Under the draft guidance, the agency says it always will consider excluding areas covered by a candidate conservation agreement, safe harbor agreement, or habitat conservation plan, and typically will not designate those areas as critical habitat if (1) the permittee is properly implementing the agreement and is expected to continue to do so in the future, (2) the agreement covers the species for which critical habitat is being designated or covers a species with “very similar” habitat requirements, and (3) the agreement specifically addresses the species’ habitat and meets the conservation needs of the species in the planning area.  79 Fed. Reg. at 27054-55.  The Service says that it will evaluate each conservation plan and agreement on a case-by-case basis and that it has complete discretion to include or exclude any area based on specific circumstances.  Id.

Click here for a PDF of this news alert.

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Beveridge & Diamond’s Endangered Species Act practice provides strategic counseling and compliance advice to project proponents in all industries to minimize the impacts of threatened and endangered species listings and critical habitat designations on our clients’ activities.  For more information on these proposed rules and guidance or to discuss strategies for efficiently navigating your project through the complex and overlapping federal resources regulatory programs, please contact W. Parker Moore at 202-789-6028, pmoore@bdlaw.com; Fred R. Wagner at 202-789-6041, fwagner@bdlaw.com; or Sara L. Vink at 202-789-6044, svink@bdlaw.com.

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